Boeing Talks to Acquire Aircraft Parts Maker Revealed

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Boeing Co. (NYSE: BA) is reported to be in talks to acquire aerospace parts maker Woodward Inc. (NASDAQ: WWD), according to a report in The Wall Street Journal citing people familiar with the matter. Trading in Woodward shares was halted for five minutes due to volatility.

Before the news broke, Woodward’s market cap was around $4.8 billion and shares jumped nearly 15%.

Woodward supplies the thrust-reverser actuation system for Boeing’s new 777X. Airline passengers hear the result of this type of system every time a plane’s engines are shoved into reverse on landing to bring the plane to a safe stop. Boeing uses Woodward systems on its 747-8, 777 and both versions of the 737 family.

Boeing also is reportedly in discussions to acquire either all or an important stake in Embraer S.A. (NYSE: ERJ), the Brazil-based maker of a 100- to 150-seat passenger jet that could compete with Bombardier’s CS100 that won an order for 75 from Delta Air Lines and caused Boeing to file a trade case that it lost last month.

After France’s Safran acquired aircraft cabin seat maker Zodiac last year, Boeing formed a joint venture with Adient PLC (NYSE: ADNT) to market seats to airline and leasing companies to equip new planes and upgrade older ones. Michigan-based Adient is the world’s largest maker of automobile seats.

Boeing’s most recent acquisition — and nowhere near this scale — was Aurora Flight Sciences, which the aerospace giant bought last year for its drone and autonomous flight capabilities.

Both these moves are in keeping with Boeing CEO Dennis Muilenburg’s desire to bring more vertical integration to Boeing, primarily in an effort to keep costs down.

Apparently squeezing suppliers for better pricing has its limits. After all, even Boeing can’t squeeze blood from a stone. It can, however, use a bigger hammer to bust up the stone.

Following the trading halt, Woodward stock traded up about 13% to $87.31, in a 52-week range of $65.22 to $89.30.

Boeing stock traded down 1.8%, at $340.35 in a 52-week range of $164.06 to $361.45.